Forecasting Sales and Developing Budgets
Sales forecasting methods
There are numerous sales forecasting methods that a business owner can embrace in order to learn about the demand of the products that he or she is offering in the market. However, each of the focusing method has its strengths and weaknesses, and it’s applied at different situations.
- Survey of buyers` intentions
In this direct method of forecasting sales, the marketing manager focusing on getting the opinion of the product consumers especially on how they intend to use of consume the product in future. Precisely, the sales manager starts by listing of all the prospective or potential buyers and then organize for a face to face interview with the selected list of potential buyers. Through the interview, the firm manages to not only learn and ascertain the future intentions of the listed consumers but also to estimate future sales of its products.
Strengths and weaknesses of this method
There are numerous strengths and weaknesses that are associated with this method. For example, this method is essential when the number of consumers is limited. In addition, the method is suitable when it comes to making short-term decisions especially those which entails the product and promotion. Consecutively, the results that are gained from the interviews are realistic and valid, especially due to the fact that they are based on direct opinions of consumers. Moreover, this method is simple to comprehend and administer. On the other hand, the method is unsuitable for long term forecasting, especially due to the fact that some necessities of consumers such as fashion, tastes, and preferences may change in the long run. In addition, the forecasts are sometimes wrong and biased especially due to the fact that some customers rarely want to give their exact requirements. In addition, surveying tends to be expensive in terms of time and resources needed. Lastly, this method is not suitable when consumers group is large.
When this method is most appropriate to use
This method is only appropriate to use when the number of consumers is limited. This is due to the fact that the amount of time and resources needed to conduct the survey may be high if a large number of consumers are to be surveyed.
- Trend analysis method
This method of forecasting sales is based on the aspect of analyzing of past sales patterns in order to anticipate or predict what the sale patterns will be in future. The trend analysis method relies on the assumption that the future events are a continuation of the past.
Strengths and weakn
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